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LexisNexis Practical Guidance®
Straightforward guidance across a range of topics
- Derivatives
- How derivatives are used in lending transactions
Dealing with hedging arrangements in loan transactions
Derivatives can be used for both speculation and hedging purposes. Derivatives are frequently used to support (or “hedge”) a loan by swapping a floating interest rate under the facility agreement into a fixed rate.
This guidance note is a broad review of what hedging is, why it may be used and of the hedging documentation in loan transactions, including the ISDA documentation framework and the lender’s lawyer’s role.
See Dealing with hedging arrangements in loan transactions.
